Card approval / score decrease - question

[Anonymous]

Helllo myFicos

I was approved for a J Crew card last week with a 1000.00 CL via the SCT (soft pull). I've read often that "opening a new account" lowers the credit score, but (so far) my score hasn't lowered since the J Crew approval.  

My question: is it just the opening of a new account itself that lowers the score ... or is it the opening of a new account with a hard pull that lowers it?  Will opening a new account with a soft pull also lower the credit score? I'm just wondering if there's a credit score decrease still looming...

[Anonymous]

My guess is that if you were to pull your report, you would not see the account yet -- is that right?  It has not yet appeared on your report?

A really crucial concept is that your credit score is based solely on information that is on your report.  So if there is no hard inquiry, and the account hasn't appeared, then nothing has changed on your report, and therefore the new card could not yet cause a score change.

Does that make sense?  Do you now see why the answer is "yes, a credit score change is likely still looming"?

Here are the "credit report" events that are often associated with a new account and a score drop:

    *  A hard inquiry appears

    *  Your "average age of accounts" (AAoA) goes down

    *  Your "age of youngest account" goes to 0 months

    *  The percentage of accounts that are "new" (< 12 months in age) increases

But a new card can (rarely) help your score, if it causes your CC utilization to go way down, as a result of increasing your total credit limit.

[Anonymous]

Hi CreditGuyinDIxie,

Correct, the card hasn't shown up in my report yet. 

What you said makes perfect sense, thanks ... but there's one aspect of my question unanswered: is it the hard pull that does the most damage (in this case, there was only a soft pull) ... or is it the other factors you mention:

   *  Your "average age of accounts" (AAoA) goes down

    *  Your "age of youngest account" goes to 0 months

    *  The percentage of accounts that are "new" (< 12 months in age) increases

... that does the damage? Is the damage / cost less with no hard pull?

A new account score hit isn't a big deal for me either way, was just curious. I'm in the garden until Feb of next year anyway. I just wanted the card for the CLIs while I'm gardening, which should offset any loss associated with opening the account. 

[SouthJamaica]

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@Anonymous wrote:

Helllo myFicos

I was approved for a J Crew card last week with a 1000.00 CL via the SCT (soft pull). I've read often that "opening a new account" lowers the credit score, but (so far) my score hasn't lowered since the J Crew approval.  

My question: is it just the opening of a new account itself that lowers the score ... or is it the opening of a new account with a hard pull that lowers it?  Will opening a new account with a soft pull also lower the credit score? I'm just wondering if there's a credit score decrease still looming...

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Adding a new account does not necessarily lower your score.

[Anonymous]

South Jamaica:  Aha! I didn't know that. A new piece of the puzzle... 

[Anonymous]

SouthJ is right.  It doesn't necessarily lower your score.  It could be that, due to the specific nature of your profile, every one of the factors I mentioned, while being affected, could be affected in such a way that it didn't have an immediate effect on your score.

Example: your AAoA goes from 4.7 to 4.1.  Because FICO looks at the integer portion of the AAoA, there wouldn't be an immediate score loss.

Example, your Age of Youngest Account goes from 2 months to 0 months.  Again, no immediate affect on your score, though there might well be an effect had it gone from 13 months to 0.

Example: the percentage of accounts that a new goes from 10% to 20%.  If FICO's lowest threshold for penalty is < 25%, then there would be no immediate score effect.

What was certain is that, if a score effect was looming, then you would not know it yet, since your report had not changed. 

[Anonymous]

ic ... that's useful, thanks.  I'll update after it shows in my report.